U.S.-based Deluxe Corp. has agreed to buy Mississauga, Ont.-based business web services firm Hostopia.com Inc. for $124 million in cash.
Under the deal announced today, Deluxe offered $10.55 for each Hostopia share, a 122% premium based on Hostopia’s closing price Wednesday at the Toronto Stock Exchange.
Hostopia provides web services that enable small and medium-sized businesses to establish and maintain an Internet presence.
“Hostopia has grown top line revenue in excess of 20% in each of the last three years,” said Deluxe CEO Lee Schram in a release.
“While we have substantial knowledge and expertise in selling to the small business market, we believe that Hostopia’s ability to attract new customers and provide additional services to that market will increase the power of our offerings,”
Hostopia CEO Colin Campbell said management and the company’s board have approved the deal.
“Deluxe and Hostopia have many similarities, including a desire to help small businesses grow and promote their businesses,” Campbell said.
“Our customers will benefit from augmented product and service offerings which include small business logo design, print-on-demand services and e-mail marketing, all of which have demonstrated demand from small businesses.”
Shareholders representing about 35% of Hostopia’s stock have agreed to vote in favour of the bid.
The deal is expected to close in the third quarter of 2008.
